Jitters in the Junkyard

Their name may not seem to fit the gilded 1980s, but junk bonds have proved to be the hottest and most controversial financial instruments of the era. These low-grade, high-interest bonds have enabled corporate raiders to raise billions of dollars for ventures that have reshaped American business. Yet most investors have had persistent reservations about the safety of the securities. One concern is that too much of the underwriting and trading in junk bonds has been handled by just one firm, Drexel Burnham Lambert (last name pronounced Lamb-bear), which controls 50% of the market. If that go-go firm were to get...